Fixed income investing is a critical element of our investment approach and a strong alternative for clients that seek to avoid or lower their exposure to the inherent volatility of the stock market. Building a portfolio of individual bonds, including corporate and municipal bonds, is the core of our fixed income strategy and one of the advantages of working with Downtown Investment Advisory (DIA). DIA has the deep fixed income expertise necessary to select individual bonds to match the goals of each portfolio.

Why buy individual bonds instead of a bond fund or index? The fundamental advantage of a bond is that it has a fixed maturity date and pays a fixed interest rate. When held to maturity, an investor can ignore the price movement of the bond, collect the interest, and get full principal back at maturity. A bond fund, however, has no fixed interest rate and no maturity date, thereby removing the best features of a bond. A bond fund's returns are also subject to the daily buy and sell actions of unknown investors, often forcing the bond fund manager to buy and sell in response to the moves of these investors.

For more detail on our Fixed Income Strategy, click below to download PDF document:

The most attractive feature of owning individual bonds is that while the market price of these investments may fluctuate, the market does not control the income generated by these investments, nor can it affect the contractual requirement of the company that issued these bonds to repay principal at maturity.

DIA will create a bond portfolio that will match your risk and income needs profile, including “laddering” the maturities (which means allocating bonds among various maturity dates to reduce interest rate risk). For clients with a higher risk tolerance who seek greater potential income, we can construct a portfolio of higher yielding bonds; alternately, for more risk averse clients, we can focus our portfolio on the highest quality corporate and municipal bonds. DIA typically employs a “buy-and-hold” strategy in line with the intention of holding bonds to maturity. DIA will also allocate assets to other income producing assets, such as preferred stock, MLPs, BDCs, REITs, and certain specialty dividend paying stocks, which can all be attractive choices for clients with a long term horizon. Our Fixed Income Strategy document link above discusses these other investment choices in more detail.

DIA’s strategy in fixed income is to be invested in a broadly diversified portfolio that will provide a continuing and growing stream of income through all seasons, regardless of how the market values these assets. Focusing our long term attention on growing that income stream, rather than on the market value of the assets, will allow for steadier gains at a less risk relative to stocks. Click HERE for our section on stocks.

This website does not constitute a solicitation to purchase or sell any securities, nor is it intended to provide specific investment advice. Past performance is no guarantee of future performance. Please click here for further disclosure information and terms of use. Registration with the SEC does not imply that DIA, or any individual providing investment advisory services on behalf of DIA, possesses a certain level of skill or training.

Interactive Brokers LLC is a registered Broker-Dealer, Futures Commission Merchant and Forex Dealer Member, regulated by the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA), and is a member of the Financial Industry Regulatory Authority (FINRA) and several other self-regulatory organizations. Interactive Brokers does not endorse or recommend any introducing brokers or third-party financial advisors, including Downtown Investment Advisory. Interactive Brokers provides execution and clearing services to customers of Downtown Investment Advisory. For more information regarding Interactive Brokers, please visit www.interactivebrokers.com.